I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Saturday, October 10, 2009

The other day I showed my alternate count (Alternate Count Possibility and Another Thought), which is now my new preferred count. I tend to like and think about lots of different options, but only share my preferred and then sometimes my leading alternate.

Well, here is another alternate. I didn't show it the other day because it is pretty speculative. (However it points to the same ending point, so if two counts give the same end point and time frame and one "looks" cleaner .... yeah, you see where I am going) :). But it might be a better explanation of the price action.

It is, you guessed it, a large ending diagonal.

I know I have been harping on this idea for a while. Columbia and I had a projection 2 months ago, then I went away from it, then I came back to it 2 weeks ago, then I went away from it .... But here is why that count idea seems compelling

1. The whole rally off the bottom since March in many indices (since Nov in some others), nearly all share the converging trendlines and have the shape of a very large wedge.

2. Let's think about what this means: A wedge is a fight between bulls and bears where both sides are almost evenly matched in that the price stays in a tight channel, but one side has advantage. In this case, the bulls. A textbook definition of the wedge is that volatility and volume decrease at the end. And this is precisely what we are seeing.

3. This wedge has been going on for several months, and it just seems fitting that a wedge of this magnitude would sport an ending diagonal, which exemplifies what the whole wedge is about to begin with

4. Look at the B wave in the 2 zigzags. It was a relatively small expanded flat that gives between 25-30% retrace. So I think the B waves are called out and identified correctly (i.e. I do NOT like the running flat idea that runs most of August).

5. If you assume that point 4 is correct, then the next wave looks like a three. I know, I know. It can count as a five. I have it as a five in my preferred count. Nearly all the leading EW bloggers count it as a five. I am just saying that it looks like and can count as a three. In the five option, the 4th wave is just so small in comparison to the two. What I am saying is that there is a technically viable alternative way to count that wave.

So here it is. The main reason why I don't have this count as my preferred? That is one massive ending diagonal. It just seems disproportionate. So that is why my preferred is my preferred. However, I still find points 1-5 above compelling and it is for these reasons why I am sharing this count.

The other day I showed my alternate count (Alternate Count Possibility and Another Thought), which is now my new preferred count. I tend to like and think about lots of different options, but only share my preferred and then sometimes my leading alternate.

Well, here is another alternate. I didn't show it the other day because it is pretty speculative. (However it points to the same ending point, so if two counts give the same end point and time frame and one "looks" cleaner .... yeah, you see where I am going) :). But it might be a better explanation of the price action.

It is, you guessed it, a large ending diagonal.

I know I have been harping on this idea for a while. Columbia and I had a projection 2 months ago, then I went away from it, then I came back to it 2 weeks ago, then I went away from it .... But here is why that count idea seems compelling

1. The whole rally off the bottom since March in many indices (since Nov in some others), nearly all share the converging trendlines and have the shape of a very large wedge.

2. Let's think about what this means: A wedge is a fight between bulls and bears where both sides are almost evenly matched in that the price stays in a tight channel, but one side has advantage. In this case, the bulls. A textbook definition of the wedge is that volatility and volume decrease at the end. And this is precisely what we are seeing.

3. This wedge has been going on for several months, and it just seems fitting that a wedge of this magnitude would sport an ending diagonal, which exemplifies what the whole wedge is about to begin with

4. Look at the B wave in the 2 zigzags. It was a relatively small expanded flat that gives between 25-30% retrace. So I think the B waves are called out and identified correctly (i.e. I do NOT like the running flat idea that runs most of August).

5. If you assume that point 4 is correct, then the next wave looks like a three. I know, I know. It can count as a five. I have it as a five in my preferred count. Nearly all the leading EW bloggers count it as a five. I am just saying that it looks like and can count as a three. In the five option, the 4th wave is just so small in comparison to the two. What I am saying is that there is a technically viable alternative way to count that wave.

So here it is. The main reason why I don't have this count as my preferred? That is one massive ending diagonal. It just seems disproportionate. So that is why my preferred is my preferred. However, I still find points 1-5 above compelling and it is for these reasons why I am sharing this count.

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The binve standard disclaimer:This in no way constitutes investing advice. All of these opinions are my own and I am simply sharing them. I am not trying to convince anybody to do anything with their money. I am simply offering up ideas for the sake of discussion. As always, everybody is expected to do their own due diligence and to ultimately be comfortable with their own investing decisions. Any actions taken based on the views expressed in this blog are solely the responsibility of the user. In no event will MTaA or its owner be liable for any decision made or action taken by you based upon the information and/or opinion provided in this blog or in any associated RSS or Twitter Feeds.